Every year, the IRS shares statistics of how many returns are filed on paper and how many are filed electronically. Last year, tax year 2008, 90 million individual tax returns were filed electronically. While that number seems large, that means 40 million individual tax returns are still filed manually… on paper… and mailed through the postal system. While that probably makes the postmaster very happy, it’s not good for you or the IRS.
Unless you have a compelling reason not to file electronically and here are three reasons why:
1. Your return is processed faster and your refund, if you’re due one, is sent faster. The IRS states that if you e-file and opt for direct deposit, you should expect your return in about three weeks. If you have a simple return, you can expect a refund in as few as eight days. If you file a paper return and opt for a paper check, it will take eight weeks. Getting your tax refund, last year’s average tax refund was $2,700, faster means you get access to it faster.
Part of the reason for the delay in paper returns is because they need to enter your data manually, which increases the probability that someone makes a mistake. When you file electronically, you skip this potential mistake.
2. E-filed returns can’t get lost in the mail. While computer glitches are possible, you’re more likely to have your return lost in the mail than lost in the tubes of the Interwebs. When you e-file, the IRS will give you electronic confirmation that they received (or rejected) your return within 24 hours. If there is a glitch, you know about it much sooner. The IRS won’t notify you if you mail in a paper return.
3. E-filed returns can’t get stolen in the mail. Identity theft is a serious problem these days and while the likelihood of your return being stolen is slim, especially if you drop it off at the post office, it’s still possible. When you e-file your return through a secure and encrypted connection, your details can’t be stolen in transit.
If you e-file through a tax preparer, there may be a fee involved for e-filing but you may qualify for free e-filing, also known as the IRS freefile program, depending on your income.
Jim writes about personal finance at Bargaineering.com.